Emily Mendell and John Taylor, NVCA and Channa Luma, The Weiser Group

Reprinted with permission, National Venture Capital Association All rights reserved

Companies that Received Venture Funding During their Growth Phases Accounted for 10 million jobs and $1.8 trillion in Revenue for the U.S. in 2003

States with Strongest Venture Funding Enjoy Highest Growth Rates

Jobs and revenues at U.S. companies backed by venture capitalists grew during the
2000 - 2003 economic downturn, according to a new study conducted by Global Insight,
sponsored by the National Venture Capital Association (NVCA).

Companies that received venture financing between 1970 and 2003 accounted for 10.1
million jobs and $1.8 trillion in revenue in 2003, representing approximately 9.4%
of total U.S. jobs and revenues. These companies registered 6.5% and 11.6% gains
in jobs and revenues respectively between 2000 and 2003 while national employment
fell 2.3% and U.S. company revenues rose 6.5%.

"The performance of venture-backed companies during these challenging years demonstrates
what venture capital creates - market leading companies that contribute significantly
to the U.S. economy and better withstand difficult business conditions," said Andrew
Hodge, managing director, North American macroeconomics at Global Insight. "Venture-backed
companies may begin very small but those that succeed go on to define new industry
sectors, changing the way we live and work."

"This study is particularly relevant when put in context with the technology bubble
of 2001," said Mark Heesen, president of NVCA. "In venture capital, failures occur
very early on but successes last a very long time. As we can see, these are the
companies that drive economic growth, innovation, and progress. Without venture
capital, they may never have gotten off the ground."

The study, entitled "Venture Impact 2004: Venture Capital Benefits to the U.S. Economy,"
was commissioned by the NVCA and conducted by leading economic analysis and forecasting
firm Global Insight, Inc (formerly known as DRI-WEFA). Global Insight constructed
a database of more than 20,000 U.S. companies that received venture capital investment
at some point between 1970 and 2003. From this database, Global Insight was able
to measure the number of jobs and revenues these companies contributed to the U.S.
economy in the years 2000 and 2003. The analysis was further broken down by states
and industry sectors.

The Global Insight study shows that VC-backed companies fared better in job creation
and revenue growth than their U.S. private company peers in 10 separate industries.
Even in sectors that suffered net job losses, such as computer hardware and semiconductors,
venture-backed companies were less affected. Not only did ventured companies grow
faster than their national industry counterparts, but the sectors with higher concentrations
of VC financing experienced higher employment growth differentials. The best
example is the computer software industry, where venture-backed firms employed 88
percent of all computer software workers. Also, venture-backed software companies
saw their revenues grow by 31 percent, compared with an overall 5 percent growth
rate for the industry as a whole.

National vs. VC Employment and Sales Growth, 2000-2003

Sector

Jobs

Revenue

National Cos.

VC-backed Cos.

National Cos.

VC-backed Cos.

Biotechnology

5%

23%

22%

28%

Business/Financial

-1%

4%

11%

11%

Communications

-18%

5%

-7%

2%

Computer Hardware & Services

-14%

-1%

-2%

12%

Computer Software

-8%

17%

5%

31%

Healthcare Products

-2%

16%

6%

9%

Healthcare Services

9%

10%

25%

26%

Industrial / Energy

-9%

1%

.2%

6%

Retailing & Media

-1%

12%

9%

20%

Semiconductors & Electronics

-26%

-10%

-21%

-16%

TOTAL

-2.3%

6.5%

6.5%

11.6%

Source: Global Insight 2004

Venture Capital Impacts Companies in All 50 U.S. States

From 1970 - 2003 venture capitalists invested $338.5 billion dollars into more than
21,600 U.S. companies. States where venture capital investment has been the strongest
in the last three decades such as California, Texas, and Massachusetts have produced
the most jobs and revenues for the country. Several states that are not necessarily
known for the highest levels of venture investing, but where a venture-backed market
leader resides, have made significant contributions to the national economy as well.
Examples include: Washington (headquarters to Microsoft and Costco); Tennessee (headquarters
to Federal Express); and Georgia (headquarters to Home Depot).

National Jobs at Originally Venture-Backed Companies in 2003 Top 15 States

While certain states have historically been greenhouses for VC investment, venture
capital investment is a national asset class and spans all 50 states. For example,
states such as Missouri, New Hampshire, Utah, and Oregon realized job and revenue
growth at venture backed companies headquartered in their domiciles during the 2000-2003
time period.

The study also found a correlation between VC funding and productivity growth. Global
Insight found that the higher the level of venture capital funding per worker in
a given state, the more likely that state was to experience growth in output per
worker. The study found that states in which companies receive the highest levels
of venture funding in turn have the highest wages.

VC-backed Companies Top Contributors to R&D

In addition to jobs and revenues, venture-supported companies, often in conjunction
with academic institutions, are performing a greater share of total U.S. research
and development (R&D). Small companies backed by venture capital were particularly
active. According to data from the National Science Foundation, the dollar value
of small company R&D rose from $4.4 billion in 1984 to an estimated $40.1 billion
in 2003, a nine-fold increase. The share of U.S. R&D done by companies with
fewer than 500 employees rose from 5.9% in 1984 to 20.7% in 2003. Not only do these
small companies fuel innovation on their own, but they also "feed" larger R&D
firms with a steady stream of idea generation, according to the study. Of the top
50 firms in U.S. R&D, 41 were either originally venture-backed or were major
acquirers of VC-created companies.

U.S. Venture Capital Dominates Globally

A dominant share of the entire world's total VC dollars, an estimated 72%, is invested
in U.S. companies. That is second only to Israel when adjusted for the relative
size of the economies of the two countries. In spite of its wealth, the U.S. has
been able to maintain a high rate of economic growth due to the recurrence of new
high-tech investment opportunities. The U.S. venture capital industry supports more
than 40% of the companies entering the public market via IPOs.

"As a worldwide leader in venture capital investments, the United States is setting
the pace for innovation, research and development, and entrepreneurship," said Jim
Breyer, chairman of the NVCA and managing partner of Accel Partners in Palo Alto,
CA. "We are one of very few countries that have a continuum of VC investors which
helps diversify risk and ensure a steady flow of quality deals, providing excellent
opportunities to grow the American economy," Breyer added.

Global Insight, Inc. (http://www.globalinsight.com/)
is a privately held company formed to bring together the two most respected economic
analysis, forecasting and financial information companies in the world, DRI and
WEFA. Global Insight provides the most comprehensive economic coverage of countries,
regions and industries available, using a unique combination of expertise, models,
data and software within a common analytical framework to support planning and decision-making.
Global Insight collects and delivers economic and financial information to clients
and also provides a broad range of consulting capabilities. With its April 2003
acquisition of World Markets Research Centre, Global Insight also provides the world's
first same-day analysis and risk assessment service covering 196 countries and 4
industries, providing insightful analysis of market conditions and key events around
the world. The company has over 3,300 clients in industry, finance and government
with revenues in excess of $70 million, over 600 employees and 23 offices in 12
countries covering North and South America, Europe, Africa, the Middle East and
Asia.

About NVCA

The National Venture Capital Association (NVCA) represents approximately 450 venture
capital and private equity firms. NVCA's mission is to foster greater understanding
of the importance of venture capital to the U.S. economy, and support entrepreneurial
activity and innovation. The NVCA represents the public policy interests of
the venture capital community, strives to maintain high professional standards,
provide reliable industry data, sponsor professional development, and facilitate
interaction among its members. For more information about the NVCA, please visit
www.nvca.org.